Spurred by wind and solar sector growth, investment in America’s renewable energy industry exceeded $40 billion in 2017 according to Bloomberg New Energy Finance, and is tracking close to the same amount in 2018, showing surprising resilience despite policy headwinds.

We’d be hitting pause, when we should be doubling down on the energy system – and the energy economy – of the future.

Fortunately, a new financial sector survey shows strong confidence that U.S. renewable energy projects will continue to increase in attractiveness compared to other investment portfolio asset classes, and cumulative U.S. private investment in renewable energy could reach up to $1 trillion between 2018 and 2030.

Renewables were the most-added source of new generation in 2017 – the 11 gigawatts (GW) of new wind and utility-scale solar capacity surpassed even natural gas – marking the fourth consecutive year renewables made up more than half of total U.S. generation additions.

This impressive growth is driving investment and creating jobs, especially in rural areas where economic opportunity can be hard to find. The U.S. Department of Labor recently underscored this job-creation potential by reporting that solar photovoltaic installers and wind turbine service technicians are the nation’s two fastest-growing occupations.

Progress like this validates the sector’s importance as a national economic engine even as the federal government has walked away from the Clean Power Plan and proposed new subsidies for coal and nuclear generation, while developers and investors grapple with new tax laws, solar tariffs, and international trade disputes.

What Energy Infrastructure Financiers are Thinking

To gauge investor confidence on the impacts of market and policy changes, the American Council on Renewable Energy (ACORE) polled senior-level respondents across the nation’s leading banking institutions, asset managers, private equity firms, and other financial firms.

While America’s aging grid infrastructure and mixed policy signals could limit future expansion, the financial sector expects renewable energy will continue to be an attractive asset class and anticipates investor confidence will remain high. Under a supportive policy and market scenario, respondents projected that their companies will at a minimum double their expected business-as usual investments in U.S. renewables between 2018 and 2030.

In this same scenario, respondents predict that cumulative private investment in U.S. renewable energy projects, as well as related investment in enabling grid technology, could hit $1 trillion between 2018 and 2030.

Policy Signals and Market Factors will Drive Investment

As with any investment class, renewable energy investors seek long-term policy certainty. The solar and wind industries already know existing tax credits remain on schedule to phase out after 2021, and federal policy signals will remain important to long-term investor confidence.

Investors say federal action to address climate externalities through carbon pricing and/or a technology-neutral tax credit for zero-carbon electricity generation could encourage growth, which is promising considering the increasing conservative support for a national carbon tax. However, state action is likely to also play a significant role in stimulating demand through ambitious renewable portfolio standards along with siting and permitting process reforms.

This coordinated effort to accelerate the investment and deployment of renewable power as the sector moves to the next stage of market maturity charts a course for America’s investment community to modernize energy infrastructure and create massive economic opportunities over the next decade and beyond.

A long-term federal policy commitment supporting carbon-free electricity generation, presumably as part of an effort to address greenhouse emissions externalities, after wind and solar tax credits phase out in the early 2020s.

Federal, state, and regional policies to promote grid modernization, including rules that allow renewables to compete fairly in electricity markets along with new incentives for energy storage and other enabling grid technologies.

Continued expansion of state renewable portfolio standards to support increasing renewable electricity deployment.

Continuing financial innovation as capital stacks evolve to replace tax equity as a key source of project financing, and to establish a more standardized approach to finance new projects like renewables-plus-storage.

Renewable is Doable

Renewable energy is now economically competitive with fossil fuels, but hitting pause and accepting business-as-usual projections due to an uneven policy playing field will hamstring investment and deployment levels, ceding U.S. leadership and the immense economic benefits coming from this booming global industry.

Major banking institutions have signaled long-term interest in the sector by making large public commitments to invest in clean technologies. Now it’s time for policymakers to do their part to ensure those investments are made in the U.S.

Hitting the ambitious but achievable $1 trillion target by 2030 means America will close the innovation and investment gap with other nations, keep creating tens of thousands of clean energy jobs, and stay within striking distance of the U.S. commitment to the Paris Accord.

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It's great to see this type of coverage. Some of the most solar-friendly parts of the country are unaware of the energy potential because they mistakenly view solar power as requiring hot weather. In fact, quite the opposite is true.

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